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Low Price, Technically Acceptable

The federal government has responded to voter cries for less cost by swinging the contracting pendulum to predominately compete federal contracts using low price, technically acceptable (LPTA) evaluation criteria for bids. This is designed to drive down the cost of federal spending for low risk services and other low risk procurements.

Prior to this pendulum swing, the mantra within the federal government was “best value.” This meant that the procurement team could establish criteria by which to judge which bid presented the best overall value to the federal government. Thus, if the bidder had a really great technical solution proposal that seemed to be in the best interest of the Government, but wasn’t necessarily the low bidder, the team could award the contract anyway citing why it was the best value.

Of course, the evaluation criteria often became less than precise under the best value method and instances occurred where the scoring criteria was weighted by the procurement team to favor their favorite and/or the incumbent, not that anyone will ever admit to that officially. But unofficially, most seasoned professionals have witnessed it in action.

What LPTA has done has upset the procurement system and procurement teams. All competitors have to do is to show enough qualifications to be judged technically competent. The evaluation of technical proposals is pass/fail only. There are no degrees of goodness for innovative approaches. It’s basically have you done this work before? Have you done it well? Are you still capable of doing it? Once the herd has been thinned technically, it moves on to pricing and at that stage the lowest price wins. You could be the incumbent and have done amazing work for your customer, but if you don’t come in as the low price bidder, you lose.

Consequently, so do the workers in most cases. What LPTA does is it forces companies to first start cutting positions and trying to do the work with less people. Once that is done, then they start offering fewer benefits and pay to keep costs low. In one instance recently, workers found that if they wanted to keep their job and transition to the winning contractor, they had to take $5 – 15K pay cuts. Ouch! Consequently, when the IT marketplace heats up and competition increases for skilled workers, guess who bails? Yep, the highly skilled knowledge base that the Government invested in goes out the door. IT professionals are not interchangeable in the Government world like they are in the commercial world. Federal Government IT is a whole different breed of cat. I’ve learned over several years that it takes at least one year to get someone fully productive in Government IT who has “come off the street.”

Unfortunately, these intangibles don’t show up in the federal budget. Groups screaming about federal spending don’t realize that it’s not just a numbers game. There are trade-offs and impacts. Our only hope is that the bean counters finally get a GAO report that shows the negative impact that LPTA is having on federal readiness and that the cost of lost knowledge and capability have a price too.